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Construction survey indicates broader growth ahead

The latest Construction Trade Survey has shown that activity in construction rose for the second consecutive quarter in Q3.

Furthermore, this growth was reported by firms across all areas of the industry: building contractors, SMEs, specialist contractors, civil engineers and product manufacturers.

Commenting on the survey, Construction Products Association economics director Noble Francis said: “It was encouraging to see that the recovery, which started in Q2, has continued into Q3. A balance of 43 per cent of contractors reported rises in activity, the second highest level since pre-recession 2007.

“Although private housing is clearly driving industry growth, all construction sectors enjoyed increases in output. With rises in new orders and enquiries, the industry clearly expects that the recovery in output will continue over the next 12 months.

“Construction tender prices in Q3 also increased for the first time in over four years, with 4 per cent of firms, on balance, reporting a rise.

“However, higher costs, most recently due to increasing labour costs, offset this. As a result, 11 per cent of firms, on balance, reported that profit margins in the industry declined in Q3.”

Overall, only 7 per cent of firms reported difficulty in recruiting trades to work on construction sites.

However, the breakdown of trades highlights that 34 per cent of firms reported difficulties in recruiting bricklayers and 32 per cent of firms reported difficulties recruiting plasterers due to the sharp increase in private house building in recent months.

National Federation of Builders chief executive Julia Evans added: “We are seeing measurable signs of growth and a healthy number of orders. However, the cost of doing business continues to rise as materials and labour cost increases far outpace revenues.

“Repair and maintenance continues to fall behind all other areas in construction and this could be taken as further evidence that the Green Deal is not yet taking hold.

“Furthermore, cutting the Energy Companies Obligation would further depress retrofit activity as it is the only scheme currently generating any significant output in this sector.

“We need greater promotion of all the options for retrofit and not get tied up in the red tape of the Green Deal.”

Key survey findings include:

43 per cent of building contractors, on balance, stated that activity rose in Q3, the second highest balance since 2007

Private new housing was the key driver of construction growth in Q3 with 22 per cent of contractors, on balance, reporting that activity rose in Q3 compared with a year ago

Building contractor new orders reached their highest level since 2007

The most positive sector for new orders was public non-housing, which primarily covers education and health, with a balance of 9 per cent

49 per cent of building contractors reported that costs rose in Q3, with labour costs and materials costs both contributing to the rise

A balance of 4 per cent of building contractors reported that tender prices rose in Q3; however, with costs also rising, a balance of 11 per cent reported that profit margins had continued to fall

Only 7 per cent of building contractors, on balance, reported that they had difficulties recruiting trades. Within the trades, however, 34 per cent of building contractors reported difficulties recruiting bricklayers and 32 per cent reported difficulties recruiting plasterers, the highest levels since 2008

Our latest HeatingCast takes the theme of the Future of HVAC, as we look ahead to our Summit in October. Henry Lawson of BSRIA looks how the world’s technology giants might approach the world of smart HVAC

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H&V News incorporating RAC is the only publication to cover the entire heating, ventilation refrigeration and air conditioning sector. Our coverage provides the most up-to-date industry news and views, delivering information that is invaluable to your business.